Farm bankruptcies are surging as Trump's trade war drags on

At least 84 farms in the upper Midwest filed for Chapter 12 bankruptcy in the 12 months that ended in June, according to a new Minneapolis Fed analysis.

That's more than twice the level seen over the same period four years ago.

Tariffs have added pressure to already low margins for farmers.

As President Donald Trump maintains protectionist policies with global trading partners, an increasing number of farms in the Midwest are struggling to stay afloat.

At least 84 farm operations in Minnesota, Montana, North Dakota, South Dakota, and parts of northwestern Wisconsin filed for bankruptcy in the 12 months that ended in June, according to a new analysis from the Minneapolis Federal Reserve, more than twice the level seen over the same period in 2014.

The strain of low commodity prices on farmers and ranchers has been compounded by tariffs, Ron Wirtz, the regional director for the central bank, said in the report. Trump has placed tariffs on more than $300 billion worth of US imports to date and threatened escalation on multiple fronts.

As countries retaliate with duties on American goods, key commodity prices have fallen sharply. Soybeans, for example, have shed nearly a fifth of their value since April. The New York Times reported this month that exports of the legume to China fell 94% through mid-October from a year earlier.

Farming margins have been "squeezed for some time, so the tariffs are certainly just more problems on top of a list of continuing problems," said Kevin McNew, the chief economist at Farmers Business Network.

States where bankruptcies are on the rise are especially vulnerable to trade tensions with China, McNew said, which placed retaliatory duties on American soybeans earlier this year. While growers elsewhere in the country have other foreign markets to turn to, the upper Midwest is highly dependent on soybean trade with China.

And in Wisconsin, where about 60% of all farm bankruptcies were filed, there are more small farms that tend to be particularly vulnerable to price changes.

Falling prices have also exerted pressure on farming finances throughout the rest of the Midwest, with more than half of respondents in a Kansas City Federal Reserve survey reporting lower farm income than a year ago.

Trump is expected to meet with Chinese President Xi Jinping on Saturday as the leaders attend the G20 summit in Argentina. Some US officials, however, asserting tariffs will pressure other countries to change trade practices seen as unfair, have sought to cast doubt on negotiations in recent days.

Uncertainty has weighed on farmers' outlooks for the rest of the year and beyond. In Missouri and Nebraska, more than 70% of survey respondents anticipated incomes would continue falling over the next three months.

"I would say we're on the start of something and not the end of something," McNew said. "There's just nothing on the horizon that really suggests things are going to get better."

Poor farming conditions could pose risks to Trump and his party in the 2020 election, even in reliably red states. Gregory Wawro, a political-science professor at Columbia University, noted that while voters in rural regions had become increasingly Republican over the past few election cycles, retrospective economic voting was an important factor in presidential races.

"Evidence indicates that, perhaps surprisingly, voters base their vote less on their personal economic experience than on their perceptions of the performance of the national economy," he said.

"But if regional economies are suffering and voters trace this to tariff policies, I would not be at all surprised to see voters in those regions to be less inclined to support Trump's reelection bid."